1. Have you met with your insurance broker to go over your coverage and know what are you covered for in the event of specific disaster(s) or losses?

2. Do you have total or partial replacement coverage?

3. Is total insurance coverage required because of the nature of your construction? How much would total TRUE replacement add to your premium a year? This may be considerable and perhaps out of reach, but you make the final deicison relating to the exposure that you wish to carry.

4. What about specific insurance for specific equipment, pollution issues and other coverages?


Regarding replacement coverage: Insurance in buildings is usually based on partial destruction, not on total loss. Of course, total loss is only a problem of certain types of constructions, location due to threats of terrorism, or other conditions.

The cost of replacing a building deals with construction costs per square foot. If you know the total square feet of the building and the typical construction costs per square feet, you may have the cost of replacing the building as it exists today in the event of a TRUE total loss, even when the present building does not meet the present standard codes. Once your establish the figure, you may set yourself to find out if you need total TRUE replacement or a significant amount under "total loss."

AdC

Thank you so much for your informative response. Your advice will help when we scrutinize our building's insurance, which I hope will be soon. I am particularly concerned about what the flooding of the sub basement ( for example from a monster hurricane) could mean to crucial equipment.

What drainage and equipment do you have in place to draw your water out from the building? Do you presently have a problem when it rains under flashflood conditions?

We have PROBLEMS too, and we are not talking about a very large, deep sub-basement. However,interestinag enough, things were cheap when the building was constructed. You will laugh if I tell you that the "drainage" consisted in opening the doors of the lobby (which is below street level) to let the water floor the elevator shaft!!! So, drainage is extremely poor and we cannot do much after revising the subject numerous times.

Getting adequately sized sump pumps that can be displaced or in place to handle water under flooding conditions is critical in our case.

Before the rain or the storm hits your building, you should start finding answers, so you may not have to engage scuba divers to look for equipment. That would be too late!!! Finally, your insurance will help with any major damages after you have done all your due diligence.

AdC

Some Boards distribute minutes to shareholders, while others do not. I do note that shareholders like it better to be informed, but be prepared to answer to them when they question why the Bopard made certain decisions.

I do not believe it to be a good thing to post them on a site, unless it was in a secure area where individual shareholders would have to log in to access the files. You do not want anyone viewing these, this can be dangerous.

Good Luck,
~AR

HOw pathetic they are at times! I have read many years' worth of monthly board meetings and they prove what we know already: history repeats over and over and over...

Philosophy apart, I would say that minutes must be "sanitized" to leave out certain sensitive areas that we all know... staff issues, shareholders and tenants relations, even when minutes may only refer to apt. number and not names for arrears, water penetration, accidents, alterations, violations, etc.

As AR mentions, minutes may be dangerous if not addressed in their right context.

I would rather spend more effort and still address operations in a more focus manner so that decisions made by the board are enlightened by way of background and reason behind the decision. In other words, I am looking by buy-in of the shareholder population if the decision is to affect financially or quality of living.

AdC

If you're looking to improve communication within the building, let me suggest a newsletter insted.

That way you're putting out the information you want, in a friendly way instead of the spartan, direct language of the minutes.

The newsletter need not be fancy -- just a page of updates distributed whenever you like. It could also include reminders (the managing agent's phone number, when to take out recyclables) and other things you like.

We've been doing it for a few years in our building and the residents love it.

Steve makes a greast point. Any building that we have that puts out newsleters, is a happier, more informed building, with less potential to stop a Board member in the hall to ask questions.

~AR

It sounds like a noble effort that may not be worth it. These are my immediate reactions:

(1)You have to re-bid every year the insurance so that you stay competitive with the rates offered by various insurance companies.

(2) Individual shareholders may receive a greater discount if they have a car and other insurance that may qualify them. Similarly, some individuals may get umbrella policies for cars, boats, co-op that will go beyond the basic.

(3) Co-op insurance has different components: liability / personal. Some may think that their personal component should not be more than $10K while others may wish to take added personal for valuable objects such as work of arts, jewelry, antiques, etc.

(4) There are insurances that offer the additional assessmsent coverage in the event of total destruction of the building and need to additionally assess for reconstruction if a total replacement insurance is not in place for the co-op.

Good luck if you feel your efforts will be compensated!

AdC

Insurance companies do not wish to assume the burden for an entire building. As a matter of fact, they have sophisticated systems that discern how much coverage they’ve written for a property and then they reinsure via any number of reinsures.

Thus, it would seem unlikely they would bid on an entire building.

In my case, I have my homeowners, auto and a mega-million umbrella policy with one carrier. For this, I obtain a discount.

Again, one carrier is unlikely to offer all residents a similar “discount” as it leaves the carrier quite exposed.

Let me ask another question; why even burden the board with this work? In my view, there are many more areas for board concentration than saving shareholders a few dollars which they soon will soon overlook.

Sure someone can cancel after showing us the policy, but at least they had insurance once.

Last May 2006 as I was traveling on the west coast, our building manager called to tell me they were entering my apartment as a compensator failed and water had percolated from the 18th floor to all apartments in the same line(s) below.

While the building assumed some expenses, I was required to use my own homeowners insurance to:
1. Remove my furniture from the living room, dining room and foyer as the entire parquet floor (monolithic) required replacement.
2. Then, at my expense, I was required to discard all carpeting and underlayment.
3. Then, after the parquet floor was replaced at co-op expense, I was required to replace the carpeting and underlayment (don't forget the 80% rule).
4. There were some wall stains, so I needed to have part of the wall painted.
5. Finally, I needed to have someone move all the furniture into the living, dining room and foyer.

My tab was about $19,000 of which insurance paid about $11,000. Yes, we bought a better grade carpet.

Ain’t I glad I had insurance?

then you will be notified if the policy is canceled. This is the same as when a shareholder has a contract do your and you get a certificate of insurance with the coop named as additional insured.

I require shareholders to provide proof of insurance, which they are responsible to obtain on their own. My reasoning is that when 2A leaks on 1A due to personal negligence (bathing 3 kids at once), the coop is not responsible for this repair. I can then, without argument from or between the shareholders, inform them that this is a situation for their own insurance companies to work out. Management and the board are free from arbitrating this shareholder - shareholder event. Of course I follow up to ensure an amicable resolve.

Mortgage companies require continued insurance on the investment. Your manager should have a copy on file from the closing; you can have him/her just maintain a spreadsheet, and annually remind shareholders to send the updated proof.

On another note, it is illegal to force renters to purchase insurance. I always "highly recommend it" and assist in pointing them to a broker (we use The Registry – same company used for credit/background checks). The rational is the same as with the shareholder.

All that said, I agree with the other posters, in that the Board should not take on this responsibility (and added possible liability if something goes wrong). Use your manager if you do this, and have it be a management policy, not a Board policy.

Good Luck
~AR

The Board is about to address the issue of all shareholders needing proof of insurance and we have a concern about a unit that was bought from foreclosure years ago. They might not even have a mortgage that requires insurance as they may have paid cash. They have a rottweiler. We have heard many carriers do not issue policies for households that have certain breeds of dogs. How can we ensure that they get insurance if that is the case? How can we be sure that these shareholders tel the insurance company that they have a rottie? If they don't disclose this fact, and there is ever an incident with the dog, can't the Co-op be held liable for any injuries or claims arising from an incident?
Thanks all.

Those questions are better suited for your insurance broker.

I resent your kind of thinking - so parental. you better find out the legality of such a requirement first. I am not sure AdC is correct.

and do fine shareholders that are not compliant. Though to be honest I have not querry counsel about legality and do not know of any shareholder that has tested this.

Jack

Sally, I agree with AR. Shs should get their own insurance. The prop mgr can keep a spreadsheet and send Shs an annual reminder at renewal time. Our Shs send our prop mgr a copy of each renewal, at least the page with effective dates so we know it's kept up. Our apt sale package includes a form (to be signed by a buyer applicant and notarized) agreeing to get insurance and send a copy of the policy (or a letter of confirmation from the insurer that it's forthcoming) to our mgmt office within 30 days of apt closing.

As AR said, it's illegal to require renters/subletters to get insurance. Our Shs who rent insure interior elements of their apt (floors, appliances, all fixtures that come with the apt), and they recommend to their renters that they get insurance to cover their personal belongings in case of fire, water damage, etc.

The board should stay out of insurance issues, and as AR said, the prop mgr can advise a Sh if s/he has to deal with another Sh directly to settle a problem and just follow up to make sure it's resolved.

"it's illegal to require renters/subletters to get insurance."

Well, you are not dealing with renters or subletters, but with shareholder or sponsor(s)if more than one, who sublease. Therefore, the shareholder who owns the unit is always responsible for liability insurance.

So, directly, you may not impose on renters, but on the shareholders of the sublease unit!!!

AdC

thanks everyone for yoru input.
I am not sure it is legal to require shareholders to maintain insurance - where can we check? i want to be 100% sure of facts. thanks!
despite the fact that you can amend it or put it inthe bylaws - bottom line - is that legal>?
sometimes the board has to get involved if structural elements othte building are involved - like the floor structure and electric between floors and any original components of the building like the original floor. that is all coop responsibility. except if there is a case of neglegence like the upstairs neighbor leaving on a tap - in which case veryone's insuracne co. should be notified inc. the coops.

You may enact a resolution of the board and demanding liability insurance for $ X value and $X for personal insurance.

Liability insurance is for damages caused to the structure and other shareholders' apartments due to negligence or accidents on the part of the shareholder. Example: You had a water overflow in your toilet tank; your dishwasher hose got dettached from the elbow under your sink, a painter fell in your apartment and had no insurance of his own; you left a window open during a storm and water penetrated your apartment and the one below, you started an accidental fire that ruined a portion of your apartment, your heat vent is defective and water came out and affected the ceiling of the apartment below or your own apartment, you decided to spread a cement slurry to place tiles in the kitchen, but the slurry was too thin and ended up in the apartment below, etc.

So, individual insurance is excellent for shareholders to buy peace of mind if something were to go wrong under their responsibility.

Finally, it has nothing to do with the responsibility of keeping the buidling infrastructure by the co-op, except that shareholders and co-op sometimes want to pass the buck to the other and conflicts ensue.

AdC

hi

That is not something anyone can answer with certainty.
Since you are not in a flood zone, it will be very inexpensive to obtain and probably worth adding (somewhat like the glass coverage on your auto)
~AR

I like to see a minimum of 3 months maitenance.
depending the size of the building and the condition, etc. your reserve should be established.
A good manager or an engineering consultant can access how much your building will need based on the condition, useful life of building components, future plans (ammenities, etc.), etc.
Just for safety, and in the mean time, have your managing agent secure a line of credit in case something happens that requires emergency funds.

~AR

We have two "reserve" funds/

Suggest you obtain the AICPA document as it defines or poses “ground rules”.
See: Common Interest Realty Associations — AICPA Audit and Accounting Guide
The Audit and Accounting Guide summarizes applicable practices and delivers "how-to" advice for handling almost every type of financial statement. It describes relevant matters, conditions, and procedures unique to realty associations, and illustrates treatments of financial statements and reports to caution auditors and accountants about unusual problems.
https://www.cpa2biz.com/CS2000/Products/CPA2BIZ/Publications/Sub+3/Common+Interest+Realty+Associations+%97+AICPA+Audit+and+Accounting+Guide+%5BSubscription%5D.htm
In our case (500 unit co-op) in NJ, we have two reserves, e.g.; short term liquid cash and long term capital improvements.

In addition, we have a line of credit. We have a “standard” capital improvement assessment each year. We collect it during the middle six months.

Until the reserve fund is replenished, we sometimes find it necessary to obtain funds to pay contractors and vendors. To this end, we use our line of credit.

But do note that we repay the line of credit before year end and that we never use the line of credit as working capital.

Thank you both for your informative answers!! I really appreciate it.

Our on hand liquid ready cash is 20% of our monthly outflow.

Our arrears from shareholders averages .2% of our yearly expected inflow of funds for all payments (maintenance, assessment, bulk cable, parking, etc.)

Our capital reserves at year end are typically $500,000.

So with 500 units, we have $1,000 per unit in our capital reserves at year end.

Our inflow for capital reserves is almost $2,000 per unit per year. Note that we collect nearly $1,000,000 per year in assessments for ongoing capital improvements per the AICPA required supplementary schedule. Our outflow is thus $2,000+/- per unit per year.

By the way we have no underlying mortgage, having paid off the original mortgage without ever refinancing or taking a new mortgage.

Or guarantors???

Again... there are many ways to help children. Even when we are grown up children, we never get old for our parents!. We used to buy brand new cars to children; why not an apartment or our house now while alive?
But, what is the maturity of the occupant and the ability to pay that is important in your case.


Position:
(1) The child has to appear with the parent as co-shareholder if you have a sublet policy in place with occupancy limits before being able to sublet.

(2) Your child and parents must comply with financial and references. Everyone that would live in the unit must be interviewed by the admissions committee.

(3) Why is the parent buying for a child? To attend the university, to provide the first home for a child as the child is trying to start a career in NYC or suburb?

(4) Any roommates from the onset must be interviwed for rules and character references must be provided.

AdC

AdC is, as usual, right on target.

Here are some of the reasons boards ask for the things AdC suggests.

* Usually the children are in their 20's, often just a year or two out of college. Many are reliable, honest and mature adults. Some, however, are not, and believe that their apartment can be treated as a dorm or a rental unit with an absentee landlord -- who happens to be Mommy & Daddy.

* Some of them believe that paying the maintenance is optional. Or they say that it's their parents' responsibility (even if it isn't).

* They may decide to have friends stay the summer while they're out of town; you & I consider that subletting, which requires an application, a fee, maybe an interview; the young person who lives there may think he/she is just being helpful to a friend in need anda that the board should butt out.

* The child may not be prepared to understand the importance of following the rules of communal living.

* Some may have roommates who change every year.

Again, some children are wonderful subtennants; our building has wonderful examples of young people who live in apartments their parents bought for them. Part of the reason is that they are responsible people. But another part is because parents and child attended the board interview, and because parents and child filled out purchase applications.

Steve

What is becoming more popular though is the ability to purchase under a Corporation or a Living Trust, which somewhat negates the whole guarantors or parents thing because the children are named as beneficiary of the Trust.

I do not care for this much because it is harder to sue the Trust than it is a physical shareholder.

~AR

NO. Currently Managing agents for residential buildings are not required to be certified or licensed.
If your managing agent has a certification, this you can tell by three or four letters following his/her name, you can lodge a complaint with the organization that supplied the certification.
Pg

Alas.

No wonder so many are so poor.

I'd like to be involved in such an effort.

Thanks for your help, PG.

--shareholder

So, beyond going to the DA, how do you deal with an agent involved in improper or questionable behavior, or simply a poor manager, who doesn't respond to problems?

If the board won't fire them, I mean.

Better biz bureau, consumer affairs, picket the office, write (ha) our state legislators?

--Shareholder

Take charge of the situation, Shareholder. You should run for the Board. Better yet, run with group of other like minded candidates who will change the management company once you're on the Board. Best of luck.

Yes, served on the board for a number of years myself, with a more enlightened group. Unfortunately, our successors seem to be having a harder time.

Coops as institutions are seriously flawed. An agent license -- a license one can move against, lodge complaints against, remove - might provide some firm improvements.

Why don't we contact our assembly representatives, and try to move that bill?

Thanks again all

--Shareholder (who alas much remain "anon")

The horse is probably dead on this one. Anon (because there are so many anons out there and we dont know if there is one anon, two anons, same person etc). Give yourself a name, how about "Brad" or " Paris or Nicole"

Fat Nickie

Hi,

"Disillusioned" might work just as well.

Thanks, Disillusioned, easier to follow the trail now.

FN.

To Anon: Very regretfully the answer is: NO.
According to the REBNY they are "Capable" of monitoring themselves consequently the bill to license is in moth balls in Albany.

Please anon (no anons). Now sad to say they are not, but the good people that run your building RM/Super/handymen/porters etc spend a great deal of their time taking courses and classes to help the building run as smoothly and efficiently as possible.

Got to run (must go to school) FN

I wasn't going to chime in on this one, but...

As a managing agent, I went to NYU for classes to achieve a CPM designation, which ethic courses are a requisite; I am a registered apartment manager (RAM) through NAHB. I also ensure that a fidelity insurance policy is in place for all sites covered. (I am currently in process of opening/starting my own management company)

My point is, that a good manager will have some sort of check and balance system, some type of ethical model and a set system for handling certain sensitive situations. These are things that should be discovered during the initial interview with the agent or management company.

Depending on the nature of the complaint you have, the authority you complain to may be different.

~AR

I would like to know when you start up your management company, please let us all know the name and information on your company when the time is right, Good luck to you.

Mike MacGowan,
President
Manhattan Resident Manager.s Club, Inc.

AR,

As I mention before, you have given excellent answers in the past from the management point of view. In fact, I have commended you for your integrity as a manager.

Perhaps you should "educate" the participants of this chatroom by providing us with some of the questions that shareholders who participate in selection of management should ask candidates when interviewing for a new management company.

Also, what due diligence should board exercise to ensure that the new management company will perform as they had hoped for.

Thanks!!!

AdC

Thanks AdC for the complements!

Property managers owe the owners a fiduciary obligation, which means in simple terms to act in a position of trust for the benefit of the principal (or Cooperative/Condo).

As per my previous post..
"...a good manager will have some sort of check and balance system, some type of ethical model and a set system for handling certain sensitive situations. These are things that should be discovered during the initial interview with the agent or management company..."

Paramount to hiring an agent/company is knowing what your needs are.
Then we can establish a check list to hire.

Several principals:
~ Hire a company that only uses licensed and insured vendors, not in-house staff.
~ Hire a company that has managers with credentials (there is added accountability to him/her).
~ Hire a company that is primarily the property management business .You don’t want a company that manages your property as a loss leader to attract owners to sell them more lucrative services like maintenance or listings and sales.

The answers to those will help you decide who is best qualified to manage your property!

The individual agent/manager should be able to answer:

~ Communication – All board members should have a cell phone number for the pm, and all residents his/her email address. (I like email best because it creates a trail, reminders, and is much faster and more effective)
~ Bidding process - how are larger projects handled? How are the bids reviewed and decided on? Also, smaller day to day repairs.. how are these handled?
~ How are emergencies handled? - give a scenario: Mrs. Jones in 5A has water seepage in her bathroom, there are 6 more floors above her.. What procedure do you take to determine the cause, resolution and conclusion?

There are many more that can be added to the list, but these are what I think to be the main ones.
Check also to see if any complaints have been filed against them.

Finally, when you hire a company that will be charging you approximately $2.00 per day per unit, don’t ask how to get it done cheaper! Instead, you should be asking what efforts will be made to extend the life of your property, develop a budget to increase your equity and cash flow and assist in reaching your written goals.

Hope this helps!!

~AR

You've given great food for thought! I'm glad you placed a value on managing a unit per day, i.e., $2.00. I'm sure many of those who complain about management companies may see the value rather steep. However, they get the services that they are paying for.

Over the years, I have come to respect the value that management may provide and fully understand that the price you are quoting is more than fair. In fact, I have told many shareholders that what do they expect by way of services if the cost of our management has remained the same for the past 7 years? Obviously, the services will be according to the current price they pay.

Thank you.

AdC

Yes, managing agents ARE required to be licensed in NYC!

How is it that nobody seems to be aware of this. Any person collecting rent, or maintenance in a co-op, or common charges in a condo, on behalf of someone else must hold a real estate brokers license under the Division of Licensing, State of New York.

Any complaints you may have against a managing agent can be brought to the Division of Licensing for disceplenary action. If an agent loses his license, he can no longer operate his business.

Mike, you are a godsend! Thanks ever so much. Will follow up!

No anons please anon

Sorry Mike - apparently managing agents are not under domain of New York State Department of Licenses - Brokers yes - and no you cannot piggy back a complaint against a managing agent for wrongful conduct onto their broker dealers license - it would have been wonderful if true but unfortunately as many of us know there is no agency that will undertake action against Management companies, board members, etc that includes the District Attorney, Attorney General which under New York State Law is the enforcement for the laws that are on the books which are violated - which is why the problem persists - and of course going to court for this type of action starts at $100,000 - if you have any ideas about how to rectify these problems count me in

We could start by emailing
1. Habitat and asking them to write an article or put the issue in the magazine for discussion
Should Managing Agents be Licensed.

2. There are 2 large organizations that represent Coops and Condos I can't find the other one.
Education Federation of New York Housing Cooperative and Condominiums 61 20 Grand Central Parkway
Forest Hills, NY 11375 718. 760. 7540. - (V) www./fnyhc.Coop

Managing agents must be licensed Real Estate Brokers in NY, IF they are collecting rent (including maitenance charges). Currently, there is no separate "managing agent license" but NY legislators have been contemplating one for years.

Therefore, if your managing agent is collecting your coop's maitenance, make sure he or she is licensed as a real estate broker. You can easily check for broker license at ny.gov.

Legal Eagle -could you please state what agency(s) licenses managing agents and where a complaint should be lodged - thank you

Managing agents collecting rent or maintenance charges (thus acting as fiduciaries) must hold a real estate broker license in New York. Real estate broker licenses are issued by the Division of Licensing at the New York Department of State. Anyone who believes that he or she is a victim of an untrustworthy or incompetent licensee of the Department of State, or who is aware of unlicensed conduct by a person or business engaging in the occupations or businesses regulated by the Department of State, may file a complaint with the Department of State at (212) 417-5790.

To Legal Eagle - Thank you

Legal Eagle I called the number listed for complaints against management co - NYS - not them, they gave me another number and unfortunately it turns about to be the Attorney General's office and I like others on this site have gone down that path and they will not do anything which of course is why these things exist and get worse - also I see that another J also responds to you - two different persons

Hi J: I have had success on several occasions by dialing this number to report managing agents collecting rent who are not licensed as NY real estate brokers (as required by NY law), and in fact have followed up in writing to me in each instance advising if it agreed that unlicensed activity was occurring.

Perhaps there was confusion about how you posited your query? There is often confusion around this issue because there is not a separate "Managing Agents License" in NY, but again, if an agent is collecting maitenance fees on behalf of coop then they are acting as fiduciaries and must be licensed as NY Real Estate Broker. Here's a link to Dept of State's Licensing Complaint Procedures, whereby you also have option to file complaint online:

http://www.dos.state.ny.us/cnsl/complain.html

Hope this is helpful.

Sorry J - Mike is correct and your response is inaccurate on several grounds. If a managing agent is collecting rent/maintenance charges (thus acting as fiduciaries), then Article 12-A of the Real Property Law of NY absolutely requires such agents to be licensed by the NY Dept of Licensing as real estate brokers (a real estate salesperson license is not sufficient). Currently there is no separate "Managing Agent License" but the NY legislature has been considering one for years. Therefore, for now, the only licensing requirement is a NY brokers license if the agent is collecting money on behalf of coop.

Those engaging in unlicensed conduct, or who are licensed but acting in an untrustworthy manner, can and should be reported to the NY Department of State. Complaints can be lodged via phone or online.

J - I don't understand your point about needing $100K to go to court? Private citizens do not enforce licensing violations, the Dept of Licensing does. However if a managing agent has breached his/her fiduciary duty to you, then a private cause of action can and should be brought and those actions do not "start at $100K" as you say.

Question: Have you called the police and your lawyer to see what rights you have to have this person removed from your property?

The Board was notified (they offered to take him to the bus). This is fairly new. He came a few times and left, but as of last week, he seems to have moved in.

We are going to contact the lawyer, but wonderded if anyone at Habitat had this problem, and how it was handled
BM

He is trespassing. Call the police and your attorney. He turned down help and could become a danger to the residents. He just wants to squat. In jail he'll get three hots and a cot.

If he's on your property (not sitting on the curb or something) call 911.

(Yes, it sounds like that's going overboard, but the police want you to call 911 when there's an issue like trespassing.)

We had similar ('tho not identical) problem at our building that went on for a several days. We spoke with our beat office, who said:

"Call 911 and report a suspicious person in your building."

In your case, the suspicious person would be in the alcove (or wherever). DO leave your phone number! When I called to report a suspicious person, the officer who responded called me to get access to the building. (In other words, if they have a question, they will call back.)

In short, let the police handle it. That way, if the vagrant gets mad, he gets mad at the police and not the building staff or residents.

Tell your neighbors, and encourage them to call 911 when they see this guy there. The police will help! You don't need a board member to make the call, and a lawyer isn't really going to make a difference in this situation.

Steve